How much do you need to earn to have a similar or better standard of living in another country? We discuss cost of living, quality of life and issues that impact expats. And offer International cost of living index comparison and expat salary calculators.

Wednesday, October 24, 2012

The question that often comes up is how tax figures into international salary calculations adjusted for cost of living differences.

For example: "Does the calculator take into account the tax rates of each country. I currently pay about 38% in Australia but the UAE tax rate is nil. should I enter my before tax or after tax salary into the calculator."

We advise using net (after tax) salary. The calculator will then apply the following formula based on the selections in the calculator:

If you use net salary the result will be the net salary in the new location. Given the tax rate is nil in AED the net salary would not be grossed up for tax but will be adjusted for cost of living, hardship and exchange rate. If however the new location tax rate was 25% then the net salary would be grossed by 25% to arrive at the equivalent gross salary in the host location.

Tokyo is the most expensive location in the world overall taking all elements of the cost of living into account. It is the most expensive place for expatriates in that it is particularly costly for the items that consume the largest portion of an expatriates living costs. Article Source: http://EzineArticles.com/7333455

The most expensive countries in the Middle East for expatriates to live in are: Qatar; United Arab Emirates; Israel; Iran; Lebanon. What other cost of living news is there for the fourth quarter of 2012?

Tokyo as the most expensive city in Asia-Pacific, Tashkent has become less expensive for expatriate’s to live in relative to other global locations. What are the other Cost of Living rankings for the Asia-Pacific Area?

The cheapest city for expatriates to live in is: Bucharest in Romania (764 most expensive in the world)

Zurich as the most expensive city in Europe has an overall cost of living index of 134.23 compared to New York with an index of 100, and Tokyo with an index of 139.89. Zurich’s cost of living index is similar to cities such as Geneva, Hong Kong, and Luanda.
Zurich is the most expensive city in Europe mainly because the Eurozone
crisis has created a flight to safety in Swiss Francs, which are
generally considered safer. The inflows have resulted in the Swiss Franc
appreciating, and as a consequence prices have gone up compared to the
Euro and the US Dollar.

Particularly expensive in Zurich are the following basket groups, groceries, healthcare, restaurants meals out and hotels, and transport.
For example a 1 kg bag of apples averages $5.08 in Zurich, 1 kg
boneless, skinless, chicken breast $32.65, 1 kg cheddar cheese $23.80,
and a 500g loaf white bread $3.17. A private practice doctor visit for
an uninsured patient is likely to cost $125 on average, and a private
hospital stay, including nursing care, medications, diagnostic tests,
food, and related costs will average $3,675 per day. A cappuccino
(regular, medium) costs on average $5.14, while a meal out (for 2
mid-range restaurant) $103.40. The average price over the last year for
highest available octane petrol / gasoline has been just over $2 per
litre.

The below ranking shows the overall Cost of Living Rankings in Europe by city:

Xpatulator.com Head of Client and Marketing Services Denise McManus
comments that: “Expatriates should remember that all other things being
equal, prices rise fastest in the places where talented people want to
be, especially when combined with a sustained high demand for high level
skills, where resources such as land are scarce.”

The cheapest country and city in the Middle East for expatriates to live in: Sanaa in Yemen (711th most expensive in the world).

Doha as the most expensive city in the Middle East has an overall cost of living index of 89.04 compared to New York with an index of 100, and Tokyo, the most expensive city in the world, with an index of 139.89. Doha’s cost of living index is similar to cities such as Aberdeen, Munich, Brussels, and Amsterdam.

Doha is
the most expensive city in the Middle East mainly because it is a
relatively small centrally controlled economy undergoing rapid growth
with large scale infrastructure projects. More than 80% of expatriates
in Qatar live in Doha. With a limited number of suppliers of goods and
services to the country, when a shortage is experienced in one store, it
is usually an indication that all stores will be out of stock. Most
goods and services are imported at great cost. Added to the fact that
salaries are reputedly the highest in the region (Nationals received a
60% salary hike in September 2011), the cost of living in Doha has
increased relative to other cities in the region.

Particularly expensive in Doha are the following basket groups, alcohol, communication, furniture & appliances, housing, and meals out.
Alcohol for home consumption, is available for those with a liquor
permit, from one shop supplying the country. A midrange bottle of wine
is approximately $24, beer ranges from $2.50 to $4.50 for a premium
beer. A monthly standard plan internet subscription (4 Mbs) is $113,
while the benchmark mobile tariff is $0.13 per minute. A a Blu-ray
player averages $145, and you will pay around $1,436 for a 46 inch LED
HD TV. While housing has become more affordable since the shortages a
few years ago, the benchmark rental for a secure upmarket unfurnished
apartment (3 bedrooms) is $4,448 in a central location, and $2,891 in a
suburban location, per month, excluding utilities. Meals out in hotels
is very expensive, but as in most cities more reasonable priced options
can be found outside of the hotels and malls. Fuel is very cheap at just
under $0.28 per litre, and vehicle prices are reasonable compared to most other parts of the world.

To provide an assignee, sent from a low cost of living country to a
more expensive country, with a similar purchasing power to what they
have in their home country, requires an adjustment to their assignment
salary. The amount of adjustment depends on which country they come
from. The larger the difference in cost of living, the larger the
adjustment required to ensure a similar level of purchasing power in the
host country.

The Top 10 overall Cost of Living Rankings in the Middle East by city:

Xpatulator.com Head of Client and Marketing Services Denise McManus
comments that: “The Middle East is not as expensive in global terms
compared to a few years ago. Inflation in the region is generally low,
and in Qatar and the UAE in particular there are more choices in terms
of accommodation and schooling. The current situation may change in
Qatar as the major projects related to the 2022 FIFA World Cup kick-off
and the number of expatriates in Qatar increases dramatically over the
next few years.”

New York City is used as the base for the cost
of living index rankings and the US dollar is used as the base
currency. The cost of living data collected is representative of an
expatriate lifestyle, where the local prices for fixed quantities of the
same good and services at or near each location, and US dollar exchange
rates are used. Prices in each location are affected by availability
(i.e. supply and demand) as well as local pricing regulations and taxes
on goods and services (e.g. premiums on luxury goods). Local inflation
is usually representative of local price increases, which in turn
impacts an expatriates purchasing power in the host country. The
exchange rate impacts both the price of imports to the host country and
the expatriate assignment salary calculation between the home and the
host country. The cost of living has a significant impact on the
purchasing power of an expatriate’s salary package.

To get the full cost of living rank listing for the Middle East go here.

The cheapest city for expatriates to live in is: Dushanbe in Tajikistan (766 most expensive in the world)

Which cities / countries drop in the ranking, and which moved up?

The biggest mover down the rankings is Tashkent in Uzbekistan, which has dropped to become the 474th most expensive location in the world.

The biggest mover up the rankings is Papeete in French Polynesia, which has risen to be the 117th most expensive location in the world.

Reasons for this movement:

Tashkent
has become less expensive for expatriate’s to live in relative to other
global locations. This is mainly due to the depreciation of the
Uzbekistan Som against the US Dollar over the past year. In September
2011 US $1 could buy UZS 1750, today that has risen to over UZS 1920,
increasing expatriate purchasing power by just under 10% in one year.

Papeetes
high cost of living is mainly due to the fact that most goods and
services are imported at great cost. Furthermore the economy is exposed
to the global economy through its heavy reliance on tourism which went
into a long decline from 2006 and was compounded by the global
recession. Groceries and communication are particularly expensive.

Tokyo as
the most expensive city in Asia-Pacific and the world has an overall
cost of living index of 139.89 compared to New York with an index of
100. Tokyo is followed by Zurich, Geneva and Luanda in the world rankings.

Tokyo is
the most expensive city mainly because of the historical strength of
the Japanese currency, the high population density, the high level of
salaries, and the lack of resources which result in a high proportion of
imports. Particularly expensive in Tokyo are the following basket
groups groceries, healthcare, housing, and transport.
Benchmark price in a major international retail store for 1 kg apples
is $7.08, 1 kg boneless, skinless, chicken breast $11.91, 1 kg cheddar
cheese $18.22, and 1 L full cream milk $2.73.

Benchmark price
for a private practice doctor visit for an uninsured patient is $125,
and a private hospital stay per day including nursing care, medications,
diagnostic tests, food, and related costs is $3,675. Benchmark rental
for a secure upmarket unfurnished apartment (3 bedrooms) is $6,293 in a
central location, and $3,209 in a suburban location, per month,
excluding utilities.

The below ranking shows the Top Ten Cost of Living Rankings in Asia Pacific by city:

Xpatulator.com Head of Client and Marketing Services Denise McManus
that: “Expatriates have long known that Tokyo is a very expensive
posting. However it is possible to live within your budget by making
sensible choices, for example we know that taxis are expensive, so
rather save money and make use of the train service. There are also many
expensive restaurants, particularly western branded ones, rather
explore some of the many lower and medium-end options.”

For the full Cost of Living Rankings for the Asia Pacific Region go here.